The curse of hydropower?

A new global study on the effects of hydropower dams on conflict, poverty, economic growth, debt and environmental effects finds that beneficiaries are far away, while those who lived near the projects suffer the most.

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As the world continues to suffer from climate change impacts, decarbonisation of the global economy is one of the most urgent needs faced by governments. This, though, will never be the only axis on which strategic political and economic decisions are taken.

With more than a billion people still living in extreme poverty, and another substantial number living just above the poverty line, rapid economic development will remain a priority for many countries. One of the key factors linking these two issues is the need for electricity, which has been identified by some countries, like China, as a basic human right.

One ways to square this circle is renewable energy, in which hydropower plays an oversize role. Developed early, and championed by state governments in both developed and developing countries, it has long dominated the renewable sector.

Often seen as a win-win solution which allowed not just the generation of ‘clean’ energy, large hydropower dams were also seen as a way to manage uneven water flows to deal with both floods and droughts, as well as provide sustained irrigation to the agriculture. Leaders such as Jawaharlal Nehru, India’s first Prime Minister, described dams as “the temples of modern India”.

Published in the Review of International Political Economy, the paper examines the key criticisms of hydropower, and its impact on conflict, poverty, slow economic growth, state indebtedness and environmental degradation.

Bringing their expertise from the disciplines they teach, Sovacoola from the School of Business, Management, and Economics at the University of Sussex in Britain and Walter from the International School of Management in Munich, Germany compare the performance of countries that derive more than 70 per cent of their power from hydroelectricity to the oil producing OPEC nations, as well as non-hydro and non-OPEC countries.

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Hydropower influences a country’s governance, economic and development indicators significantly – even though it plays such a small part of the respective countries’ economies.

The analysis, using data sets from 1985-1994, 1995-2004 and 2005-2014, does two things: compares the performance of states dependent on hydropower with those not dependent on hydropower on these variables, as well as the impact of producing hydropower on these variables.

The study is huge. The authors write, “In the first timeframe, our data analysis encompassed 113 countries, followed by 137 countries in timeframe 2 and 140 countries in timeframe 3, with lower case numbers due to missing data, mostly related to islands or microstates. To put these numbers in perspective, the United Nations currently has 193 member states. Nonetheless, the countries included in our analysis still account for 91.6 per cent of the world population in timeframe 1, 96.2 per cent of the world population in timeframe 2and 96.0 per cent of the world population in timeframe 3, respectively.”

In real terms it is hard to imagine a more comprehensive analysis, but the scale of hydropower in the global economy demands it. Sovacoola and Walter write, “According to the International Energy Agency (2016), hydropower provided about 16.3 per cent of the world’s electricity and about 85 per cent of its renewable power in 2015.

Hydroelectric dams generated at least some grid-connected hydroelectricity in more than 150 countries: at least 50 per cent of total electricity in more than 60 countries and greater than 90 per cent in more than 20 countries (Hancock & Sovacool, 2018). Haas (2008, p. 86) argues that dams are the types of infrastructure that ‘most fundamentally affect human settlement patterns, livelihoods, health and the environment’, given that they impound about 14 per cent of all global water runoff and operate on 60 per cent of the world’s 227 largest rivers.”

The results that their study produced are interesting. On two of the six variables they tested, the data did not support the criticisms. Despite large scale displacement and security interests associated with large hydropower dams, levels of internal conflicts – though higher than in non-hydropower countries and lower than in OPEC countries – was not statistically significant.

The other criticism that failed to hold up – a recent one – was that hydropower created more carbon than it offset. In fact the cumulative impact of hydropower did tend to – as its proponents suggest – decarbonise the economy, though at a slower rate.

In contrast, the data at least partially supported the four other points of criticism. “It seems that hydropower increases to some extent poverty, decrease GDP per capita, increase public debt and increase corruption,” the authors note, adding, “It is especially noteworthy that we found that hydropower influences a country’s governance, economic and development indicators significantly – even though it plays such a small part of the respective countries’ economies.”

What was even more interesting was that the countries dominated by hydropower did little better than the OPEC countries, often seen as having a “resource curse”. Sovacoola and Walter are clear, though, that not all hydropower projects need to be similar, nor their impacts. In other words, India’s large reservoir based hydropower projects which have displaced millions – often without compensation or resettlement – are not comparable to Bhutan’s run-of-the-river dam that has displaced 30 families, all of whom have been resettled.

Instead they that based on the data available, it is clear that hydropower presents some benefits and many costs, and the benefits may go to one set of people in urban areas far away, while the costs are largely borne by the indigenous people whose lands are flooded and livelihoods destroyed, exacerbating wealth gaps and slowing overall growth of the economy.

Both the winners and losers have to be recognised, and some form of equitable treatment is needed if hydropower power projects go forward. This should mean a much closer examination of hydropower projects in the pipeline.

The purely positive ways that they have been portrayed by actors such as the World Bank and the International Energy Agency, which projected in 2012 that hydropower would double by 2050, have to be reassessed. Otherwise while the world may get some decarbonisation, it will be at the cost of further poverty, slower growth in poor countries, higher corruption, and much greater debt for nations that can least afford it.

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